In the recently released decision Patton v. Aviva (2025 ONSC 4234) , the Ontario Divisional Court ruled in favor of an insurer, upholding the License Appeal Tribunal’s (LAT) determination that the insurer provided the insured with a clear and unequivocal denial of benefits and that the limitation period to dispute this denial had expired.
Maia Abbas and Eric Grossman of ZTGH successfully defended Aviva Insurance Company of Canada before both the LAT and Divisional Court. This decision brings clarity to when the limitation period following a denial of Income Replacement Benefits under the Statutory Accident Benefits Schedule begins.
The Facts
In 2020, the insured, Mr. Patton, was involved in a motor vehicle accident and applied to his insurer Echelon for Income Replacement Benefits (IRBs) under the Statutory Accident Benefits Schedule (SABS). On May 3rd, 2021, the insurer informed Mr. Patton that he must provide a signed Employer’s Confirmation Form (OCF-2) as required by section 33(1) of the SABS. The insurer also informed Mr. Patton that he was being denied IRBs of his failure to comply with these statutory requirements.
The denial letter included a dispute form with information about the insured’s right to dispute the insurer’s denial of their claim for statutory accident benefits. More specifically, the letter stated that “If you do not agree with the insurance company’s decision you may file an application with the [LAT] within 2 years of the date of reduction or denial [emphasis added]”. The letter then clarified that the two-year limit to file an application with the LAT begins on the date the insurer reduced or refused to pay the benefit at issue. It also stated that working with the insurer to resolve the dispute does not extend the two-year period and that any right to dispute the insurer’s decision will be lost upon expiration of the two-year limitation period.
On May 7th, 2021, Mr. Patton returned to work. On June 30th, 2021, the insurer informed Mr. Patton that he is no longer entitled to IRBs effective May 7th, 2021, the date he returned to work. This letter contained the same dispute form provided to the insured on May 3rd, 2021, outlining the two-year limitation period and the right to dispute the decision.
In August 2021, Aviva took priority of the claim from Echelon.
On November 24th, 2023, Mr. Patton applied to the LAT to dispute the insurer’s denial and claim benefits from November 2021 onwards.
The Statutory Limitation Period
The adjudicator at the LAT held that the application was barred from being brought forth because the statutory limitation period expired. As the adjudicator noted, the letter sent by the insurer on May 3rd, 2021, made clear that Mr. Patton was being denied benefits. Moreover, the additional dispute form gave notice of the two-year limitation period. As such, the statutory limitation period began on May 3rd, 2021, and expired prior to the commencement of Mr. Patton’s application to the LAT.
What’s in a Denial?
Section 56 of the SABS provides that an insured person must commence an application to dispute a denial or reduction of statutory accident benefits within a two-year timeframe. This limitation period commences immediately following notice of the denial.
However, the insurer’s denial of benefits must conform to certain substantive requirements. If the insurer fails to comply with these requirements, the countdown on the prescribed two years will not begin. Additionally, there is no rolling limitation period – the limitation period is triggered by the insurer’s clear and unequivocal denial of the claim, and nothing else.
In Smith v. Co-operators General Insurance Co. (2002), the Supreme Court of Canada (SCC) clarified the requirements for a clear and unequivocal denial. For the two-year countdown to begin, the insurer must inform the insured in the denial of their right to dispute the denial before the LAT in accordance with section 54 of the SABS. This must be statedin straightforward and clear language. Additionally, the notice of denial itself must be clear and unambiguous.
As the SCC explained in Smith, the purpose of these requirements is consumer protection. Consistent with this purpose, the insurer is required to do their due diligence to communicate any denial or reduction of benefits with the insured and provide them with information on how to dispute the decision.
How did these Requirements Apply?
In finding that the denial of Mr. Patton’s benefits met these requirements, the Divisional Court explained that the further warning provided in the dispute form was what made the notice sufficient to overcome any doubt that it was clear and unambiguous, as required by the SCC in Smith. This additional warning was the following: “While you are encouraged to work with your insurance company to settle your complaint, be warned that it does not extend the two-year time limit to make your claim [emphasis added]”.
This additional warning included in the letters sent to Mr. Patton brought the notice out of the shadow of previous cases wherein the notice of denial was deemed insufficient by the court to trigger the two-year limitation countdown. In other words, previous decisions held that similar warnings, despite directly encouraging the insured party to initiate their disputes within two years, were not clear and unequivocal as required by the SCC in Smith.
The Divisional Court’s decision in Traders General Insurance Company v. Rumball (2025 ONSC 779) reveals how ambiguities in the finality of an insurer’s denial may leave open the possibility that the limitation clock failed to begin counting down, even where the specific benefit in question was denied for the time being.
In Traders, the insurer’s denial was found not to be clear and unequivocal, therefore failing to trigger the limitation period countdown. Like the denial letters sent to Mr. Patton, the denial letter in Traders stated that a dispute must be initiated within two years from the date of refusal for IRBs. It also stated that if the insured becomes unable to work again due to injuries sustained in the motor vehicle accident, an OCF-3 disability certificate should be provided to determine their eligibility for further benefits.
In finding that the notice of denial was insufficient to trigger the limitation period countdown, the LAT wrote that the letter could easily be interpreted as “clearly informing” the applicant that she was eligible for further IRBs upon submitting an updated OCF-3. The LAT also found that there was no statement that the insurer would only consider an updated OCF-3 submitted within two years of the denial letter. On top of this, it held that the insurer’s use of the words “this decision” in the denial letter could reasonably be interpreted as excluding further decisions made in light of a newly submitted OCF-3 and supplementary documentation.
When compared to Mr. Patton’s case, the difference is clear: by explicitly stating that working with the insurer to resolve the claim does not extend the two-year time limit, the insurer was able to eliminate any ambiguity in the denial that could prevent the start of the limitation period countdown.
Discretionary Extensions of the Limitation Period
Despite the foregoing analysis, the LAT is entitled to exercise discretion under section 7 of the Licence Appeal Tribunal Act to extend this two-year limitation period under certain circumstances. Section 7 is worded quite broadly. It states that the LAT may grant an extension of time where “reasonable grounds” exist. Subsequent case law has provided guidance on how to determine whether “reasonable grounds” exist.
In the case at hand, the LAT refused to extend Mr. Patton’s window for filing an application. As the LAT held and the Divisional Court reiterated, there was no explanation for Mr. Patton’s six-month delay in applying to the LAT, which it considered to be a significant period of time.
The LAT also considered three other factors laid out in Manuel v. Registrar (2012 ONSC 1492) that should be considered when granting an extension of time under section 7. These factors are 1) the existence of a bona fide intention to appeal, 2) prejudice to the other party, and 3) the merits of the appeal. In applying these factors, the LAT concluded that the request for an extension should be denied.
Conclusion
To encourage the quick submission and resolution of accident benefit claim disputes, timelines such as the two-year statutory limitation period are put in place and strictly enforced. While the existence of the limitation period itself is clear, whether the notice provided by an insurer was sufficient to trigger the limitation period’s start is a question that must be determined on a case-by-case basis.
Daniel Hinds is an articling student at ZTGH and the author of this blog. If you have any questions about this blog, please contact Daniel by email at [email protected].
